2000 (8) TMI 484 - AT - Central Excise

Summary

Issues:
1. Allegations of evasion of excise duty against the appellant company.
2. Imposition of penalties on Super Cosmetics and the appellant under specific rules.
3. Dispute regarding the technical know-how fee and its impact on excise duty evasion.

Analysis:

1. The case involves allegations of evasion of excise duty against the appellant company, M/s. Calcutta Chemical Co. Ltd., and its related entities, including Super Cosmetics Pvt. Ltd. The appellant was accused of colluding with other firms, such as Shaw Wallace & Co., to siphon off funds, totaling Rs. 34 lakhs, between 1989 and 1992. The department initiated proceedings based on these allegations.

2. During the proceedings, Super Cosmetics went into liquidation, and the official Liquidator was handling the case. An order was passed directing Super Cosmetics to pay a substantial sum of Rs. 3,07,31,652/- as central excise duty, along with penalties under specific rules. Additionally, a penalty of Rs. 5 lakhs was imposed on the appellant under Rule 209A of the Central Excise Rules, which is being challenged.

3. The appellant argued that the technical know-how fee of Rs. 15 lakhs per year, in addition to the royalty for using the brand name 'Margo', was not a form of siphoning off proceeds from soap sales by Super Cosmetics. The appellant contended that these fees were legitimate payments for the brand name and technical knowledge transfer. The Tribunal acknowledged the need for a detailed argument on whether the fee constituted evasion of excise duty, and, therefore, waived the penalty imposed on the appellant for further deliberation.

In conclusion, the judgment addressed the allegations of excise duty evasion, the penalties imposed on the entities involved, and the dispute regarding the technical know-how fee. The Tribunal decided to waive the penalty on the appellant pending further arguments on the legitimacy of the fee, directing the respondents not to take coercive action for penalty recovery until the final hearing scheduled for October 24, 2000.